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Just to be sure, are you wanting to create a video DVD? Presuming the answer is yes you can mark the chapters in iMovie and Toast will create chapter markers on the DVD at those points. You can have Toast create a Scene menu where there are thumbnail images at each chapter point. The video will continuously play from one chapter to the next so that may not be what you want.

If you want each song to be its own title so you can name them in the menu then you should create individual videos in iMovie for each song just as you've been doing. Be sure to not check the box next to continuous play so the DVD returns to the menu after playing each title.